The US dollar rallied after speculation increased that the Federal Reserve will raise its discount rate in the near future. The discount rate is the rate the Fed uses to charge banks for direct loans, was last raised after the market closed on Feb. 18, 2010. The Fed raised its discount rate by a quarter percentage point to +0.75% and said the move would encourage banks to rely more on money markets for short-term liquidity needs which would help stimulate the system.

Economic news was mixed: consumer prices were mild, leading economic indicators rose +0.1% last month while jobless claims slid. The Labor Department said weekly jobless claims dropped by -5,000 to 457,000 last week. Meanwhile, consumer prices were unchanged for the first time since March 2009. The Conference Board said the index of leading indicators rose +0.1% in February which was the 11th consecutive gain.   

The fact that we have not seen any serious distribution days since the FTD bodes well for this nascent rally. It is also a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to start buying high quality breakouts. Trade accordingly.

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PICTURED: The recent volume totals were below average as benchmark S&P 500 Index rallied above its January highs.

The Healthcare Index ($HMO +3.07%) was a standout gainer Thursday, yet a very important vote among policymakers in Washington DC on healthcare reform is approaching, and uncertainty looms large over the impact it may have on corporate earnings in the healthcare and insurance industries.  Energy-related shares were among session's laggards as the Oil Services Index ($OSX -2.76%) and Integrated Oil Index ($XOI -0.85%) fell, and the Gold & Silver Index ($XAU -0.69%) ended with a small loss. The Bank Index ($BKX -1.22%) and Broker/Dealer Index ($XBD -0.57%) traded with a slightly negative bias, and the Retail Index ($RLX +0.04%) ended virtually unchanged. The tech sector was mixed, with modest gains from the Internet Index ($IIX +0.20%) and Biotechnology Index ($BTK +0.30%) offset by slightly bigger losses for the Networking Index ($NWX -1.14%) and Semiconductor Index ($SOX -0.66%).

Charts courtesy www.stockcharts.com

PICTURED: The Broker/Dealer Index ($XBD -0.57%) is encountering resistance near prior chart highs and remains -5.4% off its October 2009 recovery high.  Financial stocks are important leading indicators that regular readers of this report know weigh heavily into the assessment of the overall market outlook.  By comparison, the Bank Index has rallied about +5% above its October 2009 highs and clearly outpaced the Broker/Dealer Index.  In the near term we will watch closely to see if the Broker/Dealer Index can make more progress which, technically, would bode well for the outlook.

Ctrip.com Int'l Ltd.  (CTRP +0.30 or +0.82% to $36.92) halted its slide today with a small gain on light volume following 5 consecutive losses. It has been slumping below its pivot point toward its 50-day moving average (DMA) line. A gain above its pivot point or its most recent chart highs is still needed to confirm a fresh technical buy signal with +50% above average volume or more. Any subsequent slump below its 50-day moving average (DMA) line would raise concerns and trigger technical sell signals.

It completed an offering of additional shares on 3/03/10, shortly after it was featured under the headline "Leisure Services Firm Building Double Bottom Base" in the March 2010 issue of CANSLIM.net News.  That offering, and a recent 2:1 stock split, had the effect of increasing the supply of shares outstanding (S criteria) for this high-ranked China-based firm in the strong-performing Leisure - Services industry.  It has maintained a strong and steady annual earnings (A criteria) history. Fundamentally, its sales revenues and earnings increases have been strong in the 3 most recent quarterly comparisons and solidly above the +25% guideline (C criteria).  Another very encouraging sign with respect to the investment system guidelines is that the number of top-rated funds owning its shares increased from 51 in Mar '09 to 126 in Dec '09, which helps satisfy the I criteria.  Return On Equity is reported at 32%, well above the 17% minimum.

While the stock is currently trading within close striking range of its pivot point and all-time highs it is important to remain disciplined. It could be accumulated under the investment system guidelines only if a proper technical buy signal occurs. The stock did not trigger a technical buy signal and only encountered resistance since the "double bottom" type base was identified and it returned to the Featured Stocks list.  Now it faces some resistance up through the $39-40 area, yet it does not have a lot of overhead supply to hinder its progress.  Patient and disciplined investors will avoid the temptation to get in "early" and be on the watch for a fresh indication that more serious institutional accumulation is taking place which could lead to a sustainable advance into new high ground.

Color Codes Explained :
Y - Better candidates highlighted by our staff of experts.
G - Previously featured in past reports as yellow but may no longer be buyable under the guidelines.